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7th Circuit affirms attorney's fees award under Lanham Act

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Finding a plaintiff’s actions frivolous, the 7th Circuit Court of Appeals today has affirmed a District Court’s grant of attorney’s fees to a company that successfully defended itself after selling lamps to the plaintiff home health care provider. The 7th Circuit also granted the defendant’s motion for fees and costs pursuant to Rule 38 of the appellate rules.

In Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC No. 10-2327, appealed from the U.S. District Court for the Southern District of Indiana, Indianapolis Division, the 7th Circuit agreed with the District Court’s award of attorney’s fees in the amount of $72,747. The award was based on 15 U.S.C. § 1117(a), which allows attorney’s fees to be awarded to prevailing parties in Lanham Act suits, but only in “exceptional cases.”

However, Nightingale Home Healthcare, Inc. disagreed that this was an “exceptional case.” The 7th Circuit opinion, written by Judge Richard A. Posner, explained that while the other circuits have applied different tests to define what is an “exceptional case,” the panel on this case considered what the 7th Circuit has found in past opinions, including In Door Systems, Inc. v. Pro-Line Door Systems, Inc., 126 F.3d 1028, 1031 (7th Cir. 1997).

“We said that the test was whether the conduct of the party from which the payment of attorney’s fees was sought had been ‘oppressive,’ and that ‘whether the plaintiff’s suit was oppressive’ turned on whether the suit ‘was something that might be described not just as a losing suit but as a suit that had elements of an abuse of process, whether or not it had all the elements of the tort.’ But that, we said, ‘would not be the right question if the plaintiff had prevailed and was seeking the award of attorney’s fees. In such a case the focus would be on whether the defendant had lacked a solid justification for the defense or had put the plaintiff to an unreasonable expense in suing,’” Judge Posner wrote.

The section above was in response to whether a case was “exceptional” in terms of the awarding of attorney’s fees under the Illinois Consumer Fraud and Deceptive Business Practices Act, Judge Posner wrote.

However, fees in that case were also sought under the Lanham Act, and the court found that the test of whether a case is “exceptional,” he wrote, “is the same under both statutes, 'oppressive' in the sense expounded in Door Systems. Id. at 1031-32.”

In later cases, he wrote, the 7th Circuit further defined “exceptional” cases to be those that “lacked merit, had elements of an abuse of process claim, and plaintiff’s conduct in the litigation unreasonably increased the cost of defending against the suit;” cases that included “vexatious litigation conduct;” and a case could be found to be exceptional for reasons “'based solely on the weakness’ of the plaintiff’s claims.”

What is puzzling, he wrote, is that there are so many different definitions of “exceptional,” something he attributed to “Circuit drift,” where some circuits see more of these types of cases than others.

In this case, Judge Posner wrote the acts of Nightingale were “frivolous,” and even though Nightingale’s claims were regarding the intended use of the lamps they purchased from Anodyne, “the district judge found that Nightingale had made the claim in an attempt to coerce a price reduction from Anodyne.”

“To bring a frivolous claim in order to obtain an advantage unrelated to obtaining a favorable judgment is to commit an abuse of process,” Judge Posner wrote.

In addition to affirming the District Court’s award of attorney’s fees, the 7th Circuit also granted Anodyne’s motion for fees and costs pursuant to Rule 38 of the appellate rules.
 

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